The Securities and Exchange Commission (SEC) is expected to approve the first spot Bitcoin ETFs on US markets. Bloomberg Senior Analyst Eric Balchunas predicts a 75% chance of approval before the end of 2023. The SEC has been actively engaging with issuers, which is a new development for these types of requests and suggests a rejection is unlikely. However, it is important to note that similar predictions have been circulating for some time, so the impact on crypto markets may not be significant when the official news is released. The real consequences will only be felt if spot Bitcoin ETFs succeed in traditional financial markets, which remains uncertain.
There are already ETFs on Bitcoin available in Canada and other countries outside the US, as well as BTC price futures ETFs in the US. However, these products have not been very successful so far. Spot Bitcoin ETFs have an important difference compared to futures ETFs – they must be fully collateralized in BTC, which would reduce supply in the market and potentially increase prices if demand remains high.
The potential impact on the market may take up to three years to materialize. Additionally, the fourth halving of Bitcoin is expected in April 2024, which historically has been followed by a bull run the following year. If spot Bitcoin ETFs are approved by January 2024 and are successful within three years, 2025 could see a potential new bull run.
When spot gold ETFs were introduced in 2004, they caused a significant increase in the price of gold. Within seven years of their launch, gold saw a +400% increase after years of lateralization. Many believe that ETFs could have a similar effect on the market value of BTC.
However, there are key differences between gold and Bitcoin that may affect the impact of ETFs. BTC is considered a risk-on asset, while gold is seen as a risk-off asset suitable for long-term portfolios. Additionally, buying BTC on crypto markets is already easy, unlike gold before the introduction of ETFs. Despite these differences, it is difficult to make precise predictions about the success of spot Bitcoin ETFs, but they could attract a significant amount of capital in the market.
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